the progressive corporation 2006 annual report
financial review
The Progressive Corporation and Subsidiaries
Ten Year Summary — Financial Highlights
(unaudited)
(millions-except ratios, per share amounts and number of people employed)
| ·2006-2002 2001-1997 | 2006 | 2005 | 2004 | 2003 | 2002 | Insurance Companies Selected Financial Information and Operating Statistics – Statutory Basis |
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|---|---|---|---|---|---|---|---|---|---|---|
| Net premiums written | $ | 14,132.0 | $ | 14,007.6 | $ | 13,378.1 | $ | 11,913.4 | $ | 9,452.0 |
| Growth | 1% | 5% | 12% | 26% | 30% | |||||
| Policyholders’ surplus | $ | 4,963.7 | $ | 4,674.1 | $ | 4,671.0 | $ | 4,538.3 | $ | 3,370.2 |
| Net premiums written to policyholders’ surplus ratio | 2.8 | 3.0 | 2.9 | 2.6 | 2.8 | |||||
| Loss and loss adjustment expense ratio | 66.6 | 68.1 | 65.0 | 67.4 | 70.9 | |||||
| Underwriting expense ratio | 19.9 | 19.3 | 19.6 | 18.8 | 20.4 | |||||
| Statutory combined ratio | 86.5 | 87.4 | 84.6 | 86.2 | 91.3 | |||||
Selected Consolidated Financial Information – GAAP Basis |
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| Total assets | $ | 19,482.1 | $ | 18,898.6 | $ | 17,184.3 | $ | 16,281.5 | $ | 13,564.4 |
| Total shareholders’ equity | 6,846.6 | 6,107.5 | 5,155.4 | 5,030.6 | 3,768.0 | |||||
| Common Shares outstanding | 748.0 | 789.3 | 801.6 | 865.8 | 871.8 | |||||
| Common Share price: | ||||||||||
| High | $ | 30.09 | $ | 31.23 | $ | 24.32 | $ | 21.17 | $ | 15.12 |
| Low | 22.18 | 20.35 | 18.28 | 11.56 | 11.19 | |||||
| Close (at December 31) | 24.22 | 29.20 | 21.21 | 20.90 | 12.41 | |||||
| Market capitalization | $ | 18,116.6 | $ | 23,040.7 | $ | 17,001.9 | $ | 18,088.9 | $ | 10,819.3 |
| Book value per Common Share | 9.15 | 7.74 | 6.43 | 5.81 | 4.32 | |||||
| Return on average common shareholders’ equity | 25.3% | 25.0% | 30.0% | 29.1% | 19.3% | |||||
| Debt outstanding | $ | 1,185.5 | $ | 1,284.9 | $ | 1,284.3 | $ | 1,489.8 | $ | 1,489.0 |
| Ratios: | ||||||||||
| Debt to total capital | 14.8% | 17.4% | 19.9% | 22.8% | 28.3% | |||||
| Price to earnings | 11.5 | 16.7 | 11.1 | 14.7 | 16.6 | |||||
| Price to book | 2.6 | 3.8 | 3.3 | 3.6 | 2.9 | |||||
| Earnings to fixed charges | 24.7x | 21.3x | 27.1x | 18.8x | 13.2x | |||||
| Net premiums earned | $ | 14,117.9 | $ | 13,764.4 | $ | 13,169.9 | $ | 11,341.0 | $ | 8,883.5 |
| Total revenues | 14,786.4 | 14,303.4 | 13,782.1 | 11,892.0 | 9,294.4 | |||||
| Underwriting margins:1 | ||||||||||
| Personal Lines | 12.3% | 11.0% | 14.1% | 12.1% | 7.5% | |||||
| Commercial Auto | 19.8% | 17.9% | 21.1% | 17.5% | 9.1% | |||||
| Other indemnity2 | NM | NM | NM | NM | 7.2% | |||||
| Total underwriting operations | 13.3% | 11.9% | 14.9% | 12.7% | 7.6% | |||||
| Net income | $ | 1,647.5 | $ | 1,393.9 | $ | 1,648.7 | $ | 1,255.4 | $ | 667.3 |
| Per share (diluted basis) | 2.10 | 1.74 | 1.91 | 1.42 | .75 | |||||
| Dividends per share | .0325 | .0300 | .0275 | .0250 | .0240 | |||||
| Number of people employed | 27,778 | 28,336 | 27,085 | 25,834 | 22,974 |
All share and per share amounts were adjusted for the May 18, 2006, 4-for-1 stock split and the April 22, 2002, 3-for-1 stock split.
1) Underwriting margins are calculated as pretax underwriting profit (loss), as defined in Note 9 – Segment Information, as a percent of net premiums earned.
2) In 2003, we ceased writing business for our lender’s collateral protection program. As a result, underwriting margin is not meaningful (NM) for our other indemnity businesses due to the insignificant amount of premiums earned by such businesses after that date.
